Federal Reserve Chair Jerome Powell is facing the possibility of a criminal investigation after Congresswoman Anna Paulina Luna — a close ally of former President Donald Trump — submitted a referral to the U.S. Department of Justice (DOJ), accusing Powell of perjury before Congress.
According to Fox News, Luna claims Powell lied under oath on two separate occasions. The first instance occurred during his June 25 testimony before the Senate Banking Committee, in which he discussed the renovation of the Fed’s headquarters — the Eccles Building. Luna alleges that Powell made several materially false statements.
The second accusation involves a letter Powell sent to Office of Management and Budget (OMB) Director Russell Vought, in which he described the cost increases — from $1.9 billion to $2.5 billion — as “minor.” However, documents reviewed by Congress reportedly show that these changes were in fact significant.
These allegations emerge as Trump and his allies intensify pressure on the Fed to lower interest rates. Trump has called for a 300-basis-point cut, arguing that current inflation levels are low enough to warrant such a move. He has repeatedly criticized Powell for being hesitant to reduce rates.
If convicted of perjury, Powell could face up to five years in prison and significant financial penalties. Still, it remains unclear whether an investigation alone would give Trump grounds to remove Powell from office — a move he has previously hinted at. Trump recently suggested that Powell may be forced to resign if the fraud accusations are substantiated.
As Powell’s future hangs in the balance, market expectations for a Fed rate cut have increased. According to CME Group’s FedWatch tool, there is now a 56.1% chance the Fed will lower interest rates in September. However, at the upcoming FOMC meeting on July 30, rates are expected to remain unchanged, with a 97.4% probability based on solid June job data indicating a resilient labor market.
